Ireland prepares for payments overhaul

While there are distinct differences between Ireland's payments infrastructure and that of the UK, for example the lack of central automated clearinghouse (ACH) and the different payment instruments actually in use, it seems as though banks in Ireland are facing the same problems around the clearing of cheques as their counterparts in the UK.

In the UK following consultation in 2007/8, the Payments Council incorporated into the National Payments Plan a proposal to phase out central cheque clearing. This resulted in the publication last December of a target date of 2018 for closure of the centralised interbank cheque functions. With its own National Payments Implementation Plan, Ireland is therefore following 2-3 years behind the UK and hopefully can avoiding the adverse media reaction to retirement of cheque processing which happened over here.

However, the move away from paper-based to electronic payments bears some associated risks. Individuals who have been unfamiliar with providing their bank account information now need to be comfortable with passing it to their suppliers. In the UK, for example, the increased use of paperless direct debit has meant that it is the organisation's responsibility to verify the customer's payment data and validate their bank details such as identity, account number and address to mitigate the risk of fraud and to ensure continued efficiency.

The migration to electronic payments clearly has its advantages - it can speed up and simplify customer sign-up processes, whilst at the same time further increasing an organisation's administrative cost savings. It is also more convenient for many customers too, with no forms to complete or the possibility of delays.

In particular in the context of SEPA, a project which many hope will be completed in the next few years, it is now necessary to educate the population on the International Bank Account Number so they can make and receive SEPA payments. It is therefore important for organisations and banks to future-proof their payment systems now, before migration to these electronic methods. That way, Ireland can remain competitive with its EU counterparts and, ideally, get ahead of the curve.